Theresa May defends public sector pay cap under pressure from Labour

Easing of austerity policies aimed at reducing deficit would lead to Greek-style economic collapse, claims the PM

Theresa May raised the spectre of a Greek-style economic collapse if Britain fails to press ahead with tackling the deficit on Wednesday, as she was challenged repeatedly by Jeremy Corbyn over the public sector pay cap.

With intense political pressure on the prime minister - including from her own cabinet colleagues - to ease the strain for cash-strapped public servants, including nurses and teachers, she warned MPs about the risks of loosening the purse strings.

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